Since we last reported on the 2012 Equal Employment Opportunity Commission (“EEOC”) decision in Macy v. Holder,[1] the federal government has continued to extend protection under Title VII of the Civil Rights Act of 1964 (“Title VII”) to transgender employees. In July 2014, President Obama issued Executive Order 13672, prohibiting federal contractors from discriminating against workers based on their sexual orientation or gender identity. Two months later, in September 2014, the EEOC filed its first-ever lawsuits alleging sex discrimination against transgender employees under Title VII. Shortly thereafter, in December 2014, outgoing U.S. Attorney General Eric Holder released a memo announcing that the Department of Justice considers Title VII’s prohibition against sex discrimination to include discrimination based on gender identity, including transgender status. Finally, earlier this year, on March 30, 2015, the Department of Justice filed its first lawsuit alleging an employer engaged in discrimination and retaliation against a transgender employee in violation of Title VII.

As a result, private employers may increasingly face lawsuits asserting gender identity discrimination claims and should revisit their policies– including employment, non-discrimination, and even dress code policies – to avoid the litigation of such claims. Just last month, on April 1, 2015, Alexia (formerly “Anthony”) Daskalakis, a former employee of clothing retailer Forever 21, filed a complaint in the Eastern District of New York alleging discrimination, harassment, and retaliation on the basis of her gender, gender identity, gender expression and/or failure to conform to gender stereotypes. Daskalakis, who was assigned male gender at birth, worked as a visual merchandiser at a Forever 21 store located in Brooklyn. Daskalakis’s allegations arise from her manager’s conduct after she began transitioning to a woman. The claims in Daskalakis v. Forever 21, Inc. are currently based on New York State and City non-discrimination laws, but the complaint indicates that plaintiff will file and/or seek leave to amend the complaint to include Title VII claims after receiving a Notice of Right to Sue from the EEOC.

In another recent EEOC decision, Lusardi v. McHugh, Appeal No. 0120133395, Agency No. ARREDSTON11SEP05574 (EEOC Apr. 1, 2015), the EEOC found that the Department of the Army subjected the complainant-employee to disparate treatment and a hostile work environment. In holding that denying the employee equal access to the common women’s restroom constituted disparate treatment, the EEOC wrote: “The decision to restrict Complainant to a ‘single shot’ restroom isolated and segregated her from other persons of her gender” . . . and “perpetuated the sense that she was not worthy of equal treatment and respect.” Appeal No. 0120133395 at 13. Notably, the EEOC stated that co-workers’ confusion or anxiety regarding sharing a restroom with a transgender individual would not justify discriminatory terms and conditions of employment. Appeal No. 0120133395 at 10-11. The EEOC found that the Department of the Army had subjected the employee to a hostile work environment because a team leader referred to the employee by male names and pronouns and made hostile remarks after being aware that the employee identified as female. Appeal No. 0120133395 at 17.

While the Lusardi decision has no precedential effect for private employers, it is predictive of a potential enforcement position in the event of a transgendered employee’s charge of discrimination against a private employer. Notably, the EEOC did not declare that in all situations an employer should designate the gender-corresponding common restroom for the transgender employee’s use, but rather that the employer should develop individualized transition plans appropriate for the employee’s circumstances. Appeal No. 0120133395 at 10. Such a transition might even “include a limited period of time where the employee opts to use a private facility instead of a common one.” Id.

To reduce the risk of litigating claims of gender identity discrimination and retaliation, it is important for employers to confer with counsel to ensure that all policies comply with the employer’s obligations to transgender employees under Title VII.